Is the AI bubble bursting just as Anthropic goes public?
The sharp sell-off in tech stocks after the US midterms has cast doubt on Anthropic's looming IPO. Yet, with hundreds of billions still being invested, some think the AI party is still in full swing.
2026 was initially anticipated as the year Wall Street's AI investments would begin to yield returns. However, the market's response over the past six months has been increasingly volatile. AI stocks, such as those from Google's Alphabet, Meta and Microsoft, reached record highs in the first half, while the second half has brought considerable uncertainty.
While Nvidia's stock surged, the broader AI sector experienced a sharp decline, with Nvidia shares dropping more than 10% in a two-day period following investigations into CEO Jensen Huang's ties to a potential Chinese spy. Huang's resignation further unsettled investors.
Analysts are increasingly concerned about the astronomical expenses AI companies are incurring, with Goldman Sachs estimating that hyperscalers require around $300 billion in annual AI revenue to break even. The sell-off has led to heightened pressure from lawmakers to regulate the expansion of AI data centers. Despite the market turbulence, some experts remain cautiously optimistic.
Kit Rees, an investment strategist, believes the recent dip is merely a necessary correction and anticipates continued growth for AI technologies. Anthropic, the maker of the Claude AI model, is set to go public later this month, with a planned valuation ranging between $1.2 trillion and $1.3 trillion, despite initially targeting over $2 trillion.
Rees argues that investors should watch for more definitive signs of maturation in the AI sector, such as reduced demand or stricter regulations on data center development.
Written by urgent.news from DW News's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
